Question

When a tax is placed on the buyers of lemonade, the a. buyers bear the entire burden of the tax. b. sellers bear the entire burden of the tax. c. burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal. d. burden of the tax will always be equally divided between the buyers and the sellers.

Answer 1

When a tax is imposed on lemonade buyers, the burden of the tax will be shared by the buyers and the sellers, however the distribution of the burden is not always equal.

when a tax is imposed on product purchasers?

The supply curve is shifted by a tax paid by sellers, whereas the demand curve is shifted by a tax paid by buyers. Regardless of who pays the tax, the result is the same. With a tax on a good, consumers pay more, sellers are paid less, and there are fewer sales overall.

What is the tax split between buyers and sellers?

The cost of a sales tax is split between buyers and sellers under the scenario of demand and supply curves with normal shapes. The ratio of supply and demand elasticity determines how much of a tax will fall on either the buyers or the sellers, or both.

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